Clean and Green – The Volkswagen Emissions Scandal: Failure of Corporate Governance?

Stefan Poier

doi:10.35784/pe.2020.2.04

Clean and Green – The Volkswagen Emissions Scandal: Failure of Corporate Governance?

Stefan Poier

University of Gdansk, Institute of International Business, Chair of Marketing, Armii Krajowej 119/121, 81-824 Sopot (Poland)

DOI: https://doi.org/10.35784/pe.2020.2.04

Abstract

In 2014, a scandal involving fraud and power shook the Volkswagen Group with far-reaching consequences that are yet to be fully revealed. This article examines the Volkswagen emissions scandal in terms of corporate governance failure. After a chronological review of the events that led to this extraordinarily damaging revelation, the main differences between the American and the German board system are described. Although Germany’s two-tier board is often considered superior to the American board system, weaknesses in the area of corporate ethics and culture that led to the crisis in the Volkswagen case are identified. The particular constellation within the Volkswagen group and its ownership structure reveals failures in management ethics that led to a certain kind of behaviour among employees that was not explicitly mandated by the management but was, nevertheless, in its interest in regard to achieving company goals.

Keywords:

Volkswagen, emissions scandal, corporate governance, board systems, corporate culture

References

Abgas-Skandal: Auch andere Autohersteller manipulierten Software – WELT, 2919 https://www.welt.de/wirtschaft/article148032066/Die-pure-Verzweiflung-trieb-Volkswagen-an.html (12.11.2019).
Google Scholar

ADAC 2018, Nur noch geringer Stickoxid-Ausstoß bei neuesten Diesel-Modellen: ADAC untersucht drei Pkw mit der neuesten Schadstoffnorm Euro 6dTEMP. Auch bei ungünstigen Bedingungen sind die NOx-Messwerte niedrig, Press release, 23.04, https://www.presseportal.de/pm/7849/3923782.
Google Scholar

Affäre Lopez in Der Spiegel, 1993, 52, https://www.spiegel.de/spiegel/print/d-9293792.html (12.11.2019).
Google Scholar

ARBOUR M.‑E, 2016, Volkswagen: Bugs and Outlooks in Car Industry Regulation, Governance and Liability, in: European Journal of Risk Regulation, 7(1), p. 4-10, https://doi.org/10.1017/S1867299X00005316.
DOI: https://doi.org/10.1017/S1867299X00005316 Google Scholar

BERLE A. A., MEANS G. C., 1932, The Modern Corporation and Private Property, Transaction Publishers, New York.
Google Scholar

BLACKWELDER B., COLEMAN K., COLUNGASANTOYO S., HARRISON J. S., WOZNIAK D., 2018, The Volkswagen Scandal, in: The SAGE Encyclopedia of Business Ethics and Society (2nd ed., Vol. 1), ed. Kolb R.W., SAGE Publications, Thousand Oaks, https://doi.org/10.4135/9781483381503.n1239.
DOI: https://doi.org/10.4135/9781483381503.n1239 Google Scholar

BLOCK D., GERSTNER A.‑M., 2016, One-Tier vs. Two-Tier Board Structure: A Comparison Between the United States and Germany (Comparative Corporate Governance and Financial Regulation No. 1), University of Pennsylvania Law School, https://scholarship.law.upenn.edu/fisch_2016/1.
Google Scholar

CALKOEN W. J. L., 2015, One- and Two-TierBoards, in: Global wisdom on business transactions, international law and dispute resolution: Festschrift für Gerhard Wegen zum 65 Geburtstag, eds. Sphalinger A., Wilske S., C.H. Beck, München, p. p. 147-159.
Google Scholar

CRÊTE R, 2016, The Volkswagen Scandal from the Viewpoint of Corporate Governance, in: European Journal of Risk Regulation, 7(1), p. 25-31, https://doi.org/10.1017/S1867299X0000533X.
DOI: https://doi.org/10.1017/S1867299X0000533X Google Scholar

DU PLESSIS J. J., GROßFELD B., SAENGER I., SANDROCK O., 2017, An Overview of German Business or Enterprise Law and the One-Tier and Two-Tier Board Systems Contrasted, in: German Corporate Governance in International and European Context (3rd edition), eds. Du Plessis J.J., Großfeld B., Luttermann C,, Saenger I., Sandrock O., Casper M., (Eds.), 16, Springer, Berlin, Heidelberg, p. 1-16, https://doi.org/10.1007/978-3-662-54198-2_1.
DOI: https://doi.org/10.1007/978-3-662-54198-2_1 Google Scholar

Executive Bodies, https://www.volkswagenag.com/en/group/executive-bodies.html (18.11.2019).
Google Scholar

Ex-Verkehrsminister Wissmann wird Autolobbyist LobbyControl, 2007, https://www.lobbycontrol.de/2007/03/ex-verkehrsminister-wissmann-wird-autolobbyist/ (17.11.2019).
Google Scholar

Former CEO of Volkswagen AG Charged with Conspiracy and Wire Fraud in Diesel Emissions Scandal, 1919, https://www.justice.gov/opa/pr/former-ceo-volkswagen-ag-charged-conspiracy-and-wire-fraud-diesel-emissions-scandal (17.11.2019).
Google Scholar

GLAUB T., 2009, Lessons from Germany: Improving on the U.S. Model for Corporate Governance (No. 2), https://digitalcommons.law.byu.edu/ilmr/vol5/iss2/4/.
Google Scholar

Gross Domestic Product (GDP), 2020, https://www.destatis.de/EN/Themes/Economy/National-Accounts-Domestic-Product/Tables/gdp-bubbles.html (15.01.2020).
Google Scholar

How VW Paid $25 Billion for Dieselgate – and Got Off Easy, 2018, https://fortune.com/2018/02/06/volkswagen-vw-emissions-scandal-penalties/ (17.11.2019).
Google Scholar

JUNGMANN C, 2006, The Effectiveness of Corporate Governance in One-Tier and Two-Tier Board Systems – Evidence from the UK and Germany, in: European Company and Financial Law Review, 3(4), https://doi.org/10.1515/ECFR.2006.019.
DOI: https://doi.org/10.1515/ECFR.2006.019 Google Scholar

LI L., MCMURRAY A., XUE J., LIU Z., SY M., 2018, Industry-wide corporate fraud: The truth behind the Volkswagen scandal, in: Journal of Cleaner Production, 172, p. 3167-3175,
Google Scholar

https://doi.org/10.1016/j.jclepro.2017.11.051
DOI: https://doi.org/10.1016/j.jclepro.2017.11.051 Google Scholar

Manipulierte Software: Volkswagen hat auf die falsche Technologie gesetzt, 2019, https://www.faz.net/aktuell/wirtschaft/auto-verkehr/deswegen-hat-volkswagen-manipuliert-13834599.html (12.11.2019).
Google Scholar

Martin Winterkorn: Der Perfektionist, der Angst verbreitet, 2020, https://www.faz.net/aktuell/wirtschaft/unternehmen/vw-vorstandsvorsitzender-martin-winterkorn -im-portraet-13543928-p2.html (15.01.2020).
Google Scholar

MCKAY D. R., NITSCH R., PETERS D. A, 2015, Corporate governance and business ethics, in: Plastic Surgery (Oakville, Ont.), 23(4), p. 271-272, https://doi.org/10.1177/229255031502300403.
DOI: https://doi.org/10.1177/229255031502300403 Google Scholar

Milton Friedman goes on tour, 2019, https://www.economist.com/node/18010553/all-comments (17.11.2019).
Google Scholar

Porsche SE, 2019, Share, https://www.porsche-se.com/en/investor-relations/share (11.11.2019).
Google Scholar

SHARPE N. F, 2017, Volkswagen's Bad Decisions & Harmful Emissions: How Poor Process Corrupted Codetermination in Germany's Dual Board Structure, in: Michigan Business & Entrepreneurial Law Review, 7(1), p. 49-92, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3348663.
DOI: https://doi.org/10.36639/mbelr.7.1.volkswagen Google Scholar

SIANO A., VOLLERO A., CONTE F., AMABILE S., 2017, ‘More than words’: Expanding the taxonomy of greenwashing after the Volkswagen scandal, in: Journal of Business Research, 71, p. 27-37, https://doi.org/10.1016/j.jbusres.2016.11.002.
DOI: https://doi.org/10.1016/j.jbusres.2016.11.002 Google Scholar

Übersicht zur Entwicklung der energiebedingten Emissionen und Brennstoffeinsätze in Deutschland 1990-2017: unter Verwendung von Berechnungsergebnissen der Nationalen Koordinierungsstelle Emissionsberichterstattung, https://www. umweltbundesamt.de/publikationen/uebersicht-zur-entwicklung-der-energiebedingten-0 (15.01.2020).
Google Scholar

Volkswagen Group, Annual Report 2009, https://www.volkswagenag.com/presence/investorrelation/publications/annual-reports/2010/volkswagen/Y_2009_e.pdf (17.11.2019).
Google Scholar

Volkswagen Group, Strategy 2018, https://www.volkswagenag.com/managementreport/reportonexpecteddevelopments/strategy/strategy2018.html (17.11.2019).
Google Scholar

Volkswagen making good progress with its investigation, technical solutions, and Group realignment, https://www.volkswagen-newsroom.com/en/pressreleases/volkswagen-making-good-progress-withits-investigation-technical-solutions-and-group-realignment-1681 (17.11.2019).
Google Scholar

Volkswagen Konzern: AR 2017 – Shareholder structure, 2017, https://annualreport2017.volkswagenag.com/group-management-report/shares-and-bonds/shareholder-structure.html (11.11.2019).
Google Scholar

Volkswagen Says 11 Million Cars Worldwide Are Affected in Diesel Deception, 2015, https://www.nytimes.com/2015/09/23/business/international/volkswwagen-diesel-car-scandal.html (17.11.2019).
Google Scholar

Vor 41 Jahren musste VW schon mal zahlen, 2019, https://www.auto-motor-und-sport.de/news/vw-abgasskandal-vor-41-jahren-musste-vw-schon-mal-zahlen/ (12.11.2019).
Google Scholar

VW's Emissions Cheating Found by Curious CleanAir Group, 2015, https://www.bloomberg.com/news/articles/2015-09-19/volkswagen-emissions-cheatingfound-by-curious-clean-air-group (17.11.2019).
Google Scholar

WEINSTEIN S. (ed.), 2013, Legal risk management, governance and compliance: A guide to best practice from leading experts, Globe Law and Business, London.
Google Scholar

WIMMER A., SCHEUNERT A., KERN M., 2016, 2016, Die Akte VW – Geschichte eines Skandals [Television broadcast], ZDF/ARTE, 1.06.
Google Scholar

Download

Published

2020-07-01

Cited by

Poier, S. (2020). Clean and Green – The Volkswagen Emissions Scandal: Failure of Corporate Governance?. Problemy Ekorozwoju, 15(2), 33–39. https://doi.org/10.35784/pe.2020.2.04

Authors

Stefan Poier

University of Gdansk, Institute of International Business, Chair of Marketing, Armii Krajowej 119/121, 81-824 Sopot Poland

Statistics

Abstract views: 151
PDF downloads: 62

License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Clean and Green – The Volkswagen Emissions Scandal: Failure of Corporate Governance?

Stefan Poier

Abstract

Keywords:

References

Authors

Statistics

License

CURRENT ISSUE

Make a Submission

Lublin University of Technology Publishing House

Copyright